The State Of Social Enterprise Ecosystems

The ecosystem that social entrepreneurs encounter–everything from the availability of affordable housing to the prevalence of potential funders–can make or break an enterprise.

With that in mind, Halcyon Incubator and Capital One recently published a report on the subject, From the Ground Up: Defining Social Enterprise Ecosystems in the U.S.

“Entrepreneurs can only be successful if the ecosystem is successful,” says Kate Goodall, COO of S&R Foundation, which supports the Washington, DC-based Halcyon Incubator.

The most social entrepreneurial ecosystem-friendly city, according to the report? Washington, D.C., followed by San Francisco and Austin.

Researchers surveyed 400 social entrepreneurs in nine cities to identify their gaps and weaknesses, ecosystem-wise, and come up with a ranking. Those responses revealed four areas, or “pillars”, critical to the existence of a healthy ecosystem–availability of funding, quality of life, human capital and regulation and government responsiveness. With those pillars as the framework, the report evaluated how each city fared with each one and overall.

Here’s more about each pillar:

Funding. Identified as the top challenge faced by social entrepreneurs, it includes seed funding, grants and venture capital from both public and private sources. Respondents from San Francisco, not surprisingly, were more likely to have raised $100,000 to $1 million and to “strongly agree” that funding was accessible in their region. On the other hand, those in Washington, D.C. tended to raise up to $50,000. Overall 52% of men said funding was available compared to 40% of women.

Quality of life. That covers everything from a city’s vitality to the prevalence of social spaces. As you might expect, the better the quality of life, the more likely a social entrepreneur was to recommend that city. Of course, such recommendations inevitably attract more entrepreneurs and resources, thereby improving the overall ecosystem. Austin, which earned high marks for transportation and low cost of living, came in number one. One implication: City governments can help the local ecosystem by encouraging more affordable housing and cultural happenings.

Human capital. You gotta have top-notch mentors, employees and advisors to run a successful social enterprise. While the majority of respondents were happy with the pool of talent in their region, the more funding they’d received, the more likely they were to cite their satisfaction with the human capital in their area. San Francisco, Washington, D.C., New York City, Chicago and Boston did the best.

Regulation and receptivity. This is all about how easy–or difficult–local governments make it to start and run a social enterprise. Washington, D.C. came in first. Worst performers included New York City, which–spoiler alert–respondents said is a hard place to start a business.

As for Halycon, located in a historic house in Washington, D.C., the two-year-old incubator provides social entrepreneurs with a place to live, as well as work space, access to mentors and a $10,000 stipend. Accommodations are free for five months and entrepreneurs have another 13 months during which they can work out of the space–and make the most of the city’s ecosystem.